ICC Expo – ISO Educational Pavilion Long Beach, California

September 2015

Dale Thomure, CBO,CFM Manager – Community Mitigation

Come and see us in booth 520!

About the presentation today……

Who are we? What do we do? The Building Code Effectiveness Grading

Schedule (BCEGS) National data about building code

enforcement efforts BCEGS data application Academic studies about building code

enforcement Future development of BCEGS

Verisk Analytics, Inc. Leading supplier of

Statistical Actuarial Underwriting

information Standardized

coverage forms Class & rating

programs Licensed rating

organization Advisory services

Analytic Capabilities

• Insurance underwriting • Insurance claims adjusting (including fraud)

• Data management

More than 500 employees with advanced degrees, certifications, and professional designations in statistical modeling, engineering, geology, economics, health economics, and many other disciplines

500+

6,000+ Employees

Actuarial Professionals 200+ Property/Casualty

Underwriters 145 Including:

Strong Domain Expertise • Financial services • Healthcare

• Supply chain and environmental health and safety

Property & Casualty

A Verisk Analytics Business

Risk Analysis

Healthcare

Financial Services

ISO – Community Mitigation Programs

Public Protection Classification (PPC ®) Program Building Code Effectiveness Grading Schedule (BCEGS®) Specific Commercial Property Evaluation Schedule (SCOPES®) *FEMA/NFIP Community Rating System (CRS) * Administrator of program

Scope To measure the resources and support made

available and applied to building code enforcement, as well as the utilization of the resources, as applicable to the mitigation of losses resulting from natural hazards common to the jurisdiction being measured.

BCEGS Program Scope/Objectives

Objectives Improved building codes and enforcement Better, more catastrophe-resistant buildings Reduction of property losses Reduction of economic and social disruption

as a result of a catastrophic event

BCEGS Key Program Elements Minimum criteria for inclusion Assigns a rating of 1-10

Personal Lines Rating Commercial Lines Rating

Updated on a 5-year cycle Areas of review

Administration of codes (54%) Review of building plans (23%) Field inspections (23%)

BCEGS Schedule Format Point-based system – 100 point scale

Eligible for points in each section Prorated credit

All in the Numbers Permits Plan reviews Inspections Responsibilities Training Certification Continuing education Budget information Public awareness Property value

BCEGS Scores Across the Nation What do the Scores Mean?

Classes 4 to 6 (approximately 58% nationwide) Adopted model code – Unamended, latest edition (within 5 years) Strained staffing levels for plan review and/or inspection Staff education and/or certification at minimal levels

Classes 1 to 3 (approximately 21% nationwide) Adopted model code – Unamended, latest edition (within 5 years) Exceptional staffing levels based on workloads Staff education and certification at very high levels

Classes 7 to 10 (approximately 21% nationwide) Adopted model code – Amended to weaken and/or older editions Inadequate staffing levels for plan review and/or inspection Inadequate education and/or certification at minimal levels

BCEGS Scores Across the Nation

0.1% 3.1%

18.0%

34.0%

18.2%

5.9%

2.5% 1.3%

14.0%

2.8%

0.00%

10.00%

20.00%

30.00%

40.00%

1 2 3 4 5 6 7 8 9 10

Commercial Lines

BCEGS Scores Across the Nation

Inspection Certifications

Plans Examiner Certifications

Training

Plan Review Workload

Inspection Workload

Jurisdiction Results Benchmarking Report

Background information Code adoption Training and certification Staffing levels Point analysis Natural hazards Unique customized report

BCEGS Application

BCEGS and Insurers How does BCEGS aid the insurer?

• Identification of differing rigor in code enforcement • Increased certainty in risk assessment • Building Underwriting Reports • Analysis of portfolio risk • Prediction of extent of loss • Enhanced Wind Rating Program

• Informed Decisions

BCEGS and the Community How does BCEGS help my community? • Enhanced resilience for homes and businesses • Identification of state and regional trends and benchmarks • Detailed information about resources • Greater choices in insurance offerings • Potential premium discounts • Potential reduced deductibles • Lower frequency of fire loss

National BCEGS Data Application Building Underwriting

Reports (BUR) Building Specific

350 K Yearly

BCEGS in BG II Loss Cost Advisory Loss Cost is a projection of an insurer’s average

future loss and loss adjustment expenses Delivered for both BG I (primarily fire) and BG II (primarily

wind) Based on Construction, Occupancy, Protection and

Exposure (COPE) information published by Verisk Developed using field-verified property information as well

as historical premium and claims data BCEGS factor can be used by insurers to adjust the BG II

loss Cost Utilizes ISO’s 3 rating schedules – Primarily SCOPES,

FSRS and BCEGS

National BCEGS Data Application

National BCEGS Data Application Enhanced Wind

Rating Program Modification to Loss-

Cost based on details specific to a building

National BCEGS Data Application Community Rating

System (CRS) 432.h BC2 credits the community’s Building Code Effectiveness Grading Schedule (BCEGS) classification.

National BCEGS Data Application FEMA

National BCEGS Data Application FEMA Hazard Mitigation Grant Program

Part of Hazard Mitigation Assistance (HMA)

Additional 5% Initiative 5% may be used to fund

additional hazard mitigation measures

May increase up to 10% for additional activities that promote disaster-resistant codes

Must adopt disaster-resistant codes or improve BCEGS score.

National BCEGS Data Application Academic, Government

and Insurance Industry Studies

Wharton Study – Further Validation of BCEGS

“ISO’s BCEGS ratings provide a joint assessment of both the stringency of adopted codes in addition to how well these adopted codes are enforced.”

“A midsize community of 50,000 people that experiences a moderate hail storm could expect to reduce losses by approximately $4 to $8 million by adopting and enforcing appropriate building codes.” “Communities with a favorable BCEGS score can expect a 12 – 18% reduction in damage as compared to less favorable scores.”

FEMA NMSZ Report – Usage of BCEGS Data

“In order to understand the status of the local building codes, the Building Science Branch of FEMA Federal Insurance and Mitigation Administration (FIMA) has been working with Insurance Service Office, Inc. (ISO) and other partners to track building code adoption and enforcement conditions at the local level.”

“The statistics indicates that the NMSZ is lagging behind the nation in adoption of building codes. As people in the area commemorate the bicentennial great New Madrid earthquakes, FEMA and the National Earthquake Hazard Reduction Program call on the local communities to take full-strength building codes for protection against earthquake risk in the area.”

ISO Fire Frequency Study

33

0.000

0.500

1.000

1.500

2.000

2.500

3.000

3.500

15-25 25-35 35-45 45-55 55-65 65-75 75-85Aver

age

Annu

al F

ires (

avg

'09-

'11)

/ 1

k pe

ople

('1

0 ce

nsus

)

2011 State BCEGS score

Fire Frequency by state BCEGS Score category

Sources: • 2010 Census • NFIRS • BCEGS

database

ISO Fire Frequency Study

34

0.0

5.0

10.0

15.0

20.0

25.0

15-25 25-35 35-45 45-55 55-65 65-75 75-85

Fire

dea

ths p

er m

illio

n pe

ople

(201

0)

2011 State BCEGS score

Fire deaths by BCEGS score category

Sources: • USFA • BCEGS

database

BCEGS Future Development

Schedule Revision Project 2016 Increased emphasis on

enforcement activities Certification Training Experience

Frequency of code adoption Updates to match trends in

industry

Questions?